Water is a by-product of oil extraction process whose amount needs to be determined accurately to optimize the oil production process. Almost 99.9% of the instruments used to determine water content in oil, are installed on the top surface outside an oil well. With the top surface water-fraction or watercut (WC) meters, it is impossible to locate the water producing zones inside the well because oil (and water) is produced from multiple branches inside a well. Ideally, a downhole WC sensor needs to be installed with every branch of the well for better water management. This paper presents a compact microwave based WC sensor which is compatible with an existing downhole system. Sensor consists of a λ/4 open stub based spiral resonator. The stub is printed on a dielectric core residing in the center of a metallic pipe. The stub is fed with a microstrip feedline which has a dedicated ring-shaped ground plane. Mixture flowing between the central core and the metallic pipe changes the dielectric properties and the resonance frequency of this uniquely designed sensor. WC sensing phenomenon has been validated both in simulations as well as inside a flow loop with measured sensitivity of over 200%.